New Car Dealers, You Have a Future in "Buy Here, Pay Here"
As new-vehicle sales continue to be affected by the economy and the decreasing average credit scores of vehicle purchasing customers, many franchise dealers are considering adding a buy-here, pay-here operation as another profit center for their business. This addition of Buy Here, Pay Here is not as easy as opening another used car lot and can be expensive and cash flow negative for some time. The long term profit potential, however is more consistent and predictable than the new vehicle department.
For some time, buy-here, pay-here has had the image of an operation not particularly good for new car franchisees. To begin with, due to the difference in demographic of the customer, new car franchise staff and owners have been concerned that they would have too many BHPH customers tieing them up in their new car showrooms.In addition, there may have been a concern that once a new car store became known for selling buy here pay here, the average Fico score of its’ customers may drop, and the retail banks approval rates may go down for their “good” credit customers. Some of these may be true, but the benefits are so strong and there are ways to do BHPH without having the negatives. Read more
New Car Dealers – You Have a Future in Buy Here Pay Here, Part 2 – Location
If you’ve read my first article for New Car Dealers and Buy Here Pay Here, then you understand the idea of treating BHPH as a separate franchise, so I will assume that you are interested in learning more. This is my 2nd article in the series for new car dealers. Now let’s talk about some suggestions on where to locate your new BHPH franchise.
My first suggestion always is to put your BHPH location away from your new store completely. It prevents confusion for your people and customers.
To begin with, understand that you need to physically separate your inventory from your normal used car operation. The customers you will have, always want the best vehicle for their money. So, if the retail used car inventory is parked in the same row as your BHPH, they will want those vehicles and not the ones they can afford in your program. It is better not to set their standards too high to start with. This also helps your salespeople stay in the BHPH mental state with your customers. Read more
